London NHS hospital trust faces being declared bankrupt

Jun 26, 2012

Health Secretary could bring in administrator as South London Healthcare has debts of £69m

A LONDON NHS trust which has racked up a debt of £69m in the last financial year is facing dissolution by Health Secretary Andrew Lansley, with the threat of having some of the services at its three hospitals closed, the BBC reports today.

South London Healthcare, which runs the Princess Royal Hospital in Orpington, Queen Elizabeth Hospital in Woolwich and Queen Mary's Hospital in Sidcup, has been told that an administrator could be brought in to wind the operation down.

The trust has stressed that services will continue to be run "as normal" while Lansley makes his decision, and even if it is dissolved it is possible that another NHS trust or a private healthcare provider could take them over and continue to run them.

The problems besetting the South London Healthcare trust are linked to a £2.5bn private finance initiative (PFI) deal that it signed under the last Labour administration in July 1998 which allowed it to rebuild the Orpington and Woolwich hospitals.

According to The Guardian, the trust is repaying £61m a year - almost 15 per cent of its annual income of £424m - and will be doing so for the much of the next two decades. This has caused the trust to lose almost £1m a week and build up a deficit of £150m.

The BBC's health correspondent Nick Triggle says that the move by Lansley "breaks new ground". It's the first time a Health Secretary has been put in this position - "and that in itself is a warning shot for those NHS trusts which are struggling".

There are more than 20 trusts facing financial difficulties - although none in such a perilous position as South London Healthcare - and Triggle says that the government will be signalling its intent to change the culture where failing trusts were bailed out by the NHS.

"The effect [of Lansley's actions] will be felt across the health service," Triggle concludes, "and while that may be welcomed by health economists, it will undoubtedly cause dismay to some patients."

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Well done Labour!
Yet again, where is the money coming from?